Helsinki to cut municipal tax rate by 0.5pps to curb rise in cost of living

Helsinki’s Mayor Jan Vapaavuori (NCP) argues that the municipal tax rate must be lowered in order to keep the cost of living in check in the Finnish capital.

Political groups on the Helsinki City Council agreed on Sunday to lower the municipal tax rate by 0.5 percentage points to 18.0 per cent in accordance with the budget proposal of Jan Vapaavuori (NCP), the Mayor of Helsinki - writes helsinkitimes.fi.

“Urbanisation is continuing rapidly and no notable decreases are in sight for the cost of living in Helsinki. The state is also proposing in its budget draft to raise the property tax, which for its part will contribute to an increase in the cost of living and raise the total tax ratio,” Vapaavuori argued in his budget proposal.

He has also reminded that the city is expected to record an increase in total tax revenues due to strong economic growth in spite of the proposed municipal tax cut.

The tax cut would reduce revenues from the municipal tax by an estimated 70 million euros. The City of Helsinki has calculated that the municipal tax will generate a total of 2,530 million euros, the corporate tax 540 million euros and the property tax 285 million euros in revenues in 2018.

The City Council on Sunday also agreed to raise the appropriations for social and health care services by 23 million euros to, for example, promote the availability of home care services for the elderly and that of mental health services for children and young people, according to Helsingin Sanomat . It also decided to add five million to the 40 million euro increase in education appropriations proposed by Vapaavuori.

The budget proposal still requires the approval of the Helsinki City Council.

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